Zimbabwe's Marange Diamonds Put Kimberley Process to the Test

The question of whether and how diamonds from Zimbabwe’s rich Marange field should enter world markets has driven a wedge through the Kimberley Process. The meeting in Kinshasa was called in a bid to resolve that internal conflict, but some observers see little reason for optimism

The current inter-sessional meeting of the Kimberly Process Certification Scheme taking place in Kinshasa, in the Democratic Republic of Congo, has the potential to be one of the most critical meetings of the watchdog group since its establishment in 2003.

For the past three years the Kimberley Process has struggled to address the complex issues of human rights and corruption posed by Zimbabwe’s development of its Marange alluvial diamond field in the east of the country near the border with Mozambique.

The question of whether and how diamonds from Zimbabwe’s rich Marange field should enter world markets has driven a wedge through the Kimberley Process. The meeting taking place in Kinshasa was called in a bid to resolve that internal conflict, but some observers see little reason for optimism.

“Without a resolution very soon and without an agreement coming out of Kinshasa, we’ll just find the Kimberley Process collapses, because it can’t cope with the weight of its members all taking different approaches and breaking rules whenever they please,” he said.

Kimberley restricted the sale of rough diamonds from Marange in November 2009, and some certified stones were auctioned during 2010. But Zimbabwe chafed at the restrictions and a meeting late last year in Jerusalem failed to find a consensus on how to move forward with Zimbabwe as Western members and African producers divided.

Simmering tensions mounted to a Kimberley crisis in March 2011 when Kimberley’s new Congolese Chairman Mathieu Yamba unilaterally declared that Zimbabwe could sell Marange diamonds without further oversight.

But many participants and civil society groups argued that the chair’s decision does not stand because there was no consensus or “collective will” on an issue that needs to be addressed by all participants, citing a November 2010 administrative decision stating hat the chair "represents the collective will of the participants."

The United States, which saw Marange cash flows bolstering the ZANU-PF side of the government in Harare, threatened to publish the names of companies trading in Marange diamonds. Most participants have not been openly buying such stones.

Diamond market expert Chaim Even-Zohar told VOA Studio 7 that there is very little to prevent Marange diamonds from entering international markets.

“Zimbabwe is currently issuing certificates. The question is: are other countries accepting them?” Even-Zohar said. “Except for South Africa, no country has publicly declared allowing formal Marange diamond imports."

"The danger is that traders in some countries which unofficially imported Marange goods may mix these goods with other productions and then export them with valid KP certificates and disguise the real origins," Eve-Zohar said.

"How many customs officers in recipient countries have the expertise to establish the origins in a parcel containing a 'mix' of diamonds? There is very little that prevents Marange diamonds from flowing into the legitimate diamond trade."

At this stage, “Zimbabwe fatigue” has set in among Kimberley members. Harrowell suggested that Harare has outmaneuvered the diamond watchdog.

“This will be the fifth consecutive [Kimberley] meeting I’ve been to that has been completely swamped by Zimbabwe,” Harrowell said. “It’s a tactic that the Zimbabwean government knows well and uses to great effect. It grinds down international forums."

"It waits everybody out. It waits until everybody’s fed up with talking about it and then it gets away with a light touch deal. It’s frustrating to see it happening, but people are tired of talking about Zimbabwe and they’re tired of ignoring important and pressing issues.”

While participants want to move on to other business, the Marange field is too rich to ignore.

Experts say it could yield two billion dollars a year in diamonds, making Zimbabwe one of the world’s top diamond producers.

Such wealth has generated controversy and dispute. Having granted a concession to the London-traded African Consolidated Resources, Zimbabwe’s government booted ACR out in 2006 after it became apparent how rich Marange really was.

A diamond rush followed as the Zimbabwe Mining Development Corporation, a state entity, took it over and struggled to secure the 70,000-hectare diamond field. Some 35,000 panners poured in, prompting the military to launch "Operation No Return" in 2008. Human rights groups reported that soldiers killed more than 200 people during the operation.

In 2009 a Kimberley review team observed military smuggling and recommended that Zimbabwe be suspended. But at the following plenary meeting, Kimberley members ignored the team’s recommendation and merely restricted the sale of Marange rough stones.

The unprecedented move to restrict a region instead of banning the whole country led to problems for Kimberley, which has been in uncharted territory with Zimbabwe ever since.

Ian Smillie, a key architect of the Kimberley Process and the chairman of Diamond Development Initiative told VOA that the Zimbabwe question “should have been simple, it should have been clear. The Kimberley Process should have got very tough with Zimbabwe right at the beginning.”

Zimbabwe signed off on an agreement for a joint work plan aimed at bringing Marange operations into compliance with Kimberley standards. Some now consider the plan a dead letter, noting that the KP Monitor Abbey Chikane approved two companies operating in the zone, and Congolese Chairman Yamba has given Zimbabwe sales a green light.

Chikane’s judgment has been widely questioned, especially after a prominent social activist was arrested and tortured in 2010 because of information he had given the monitor.

Western countries are pushing for recognition of the joint work plan, noting that Harare never fulfilled the agreement and should remain under restrictions.

Smillie argued that Zimbabwe is still far from compliance. “To be a member of the Kimberley Process and to stay in the Kimberley Process, you have to have good internal controls over your diamonds,” said Smillie. “You also have to have credible penalties for smuggling. Zimbabwe has neither, in fact government officials, military and police are actively involved in a lot of the smuggling that is going on.”

Smillie worried that smuggled Marange diamonds are contributing “hundreds of millions of dollars to [President Robert] Mugabe’s war chest”

“There’s going to be an election, and there’s almost certainly going to be violence. And diamonds are going to contribute to it. The Kimberley Process is supposed to stop conflict arising from diamonds, not contribute to it. It’s certainly working against its own stated objectives,” said Smillie.

Despite progress, Zimbabwe has not complied with Kimberley’s minimum standards in Marange, says Shamiso Mtisi, the so-called Kimberley local focal point or nongovernmental monitor, a position created after Chikane came under fire for his questionable assessment of the situation on the ground in Marange.

“One of the key issues is the continuation of human rights violations in Marange,” Mtisi said. “For example, we received reports last week that people were beaten up in Chiadzwa.”

In Kinshasa this week, Mtisi will also report on smuggling, which he says continues on a large scale and is overseen by the military and police.

“Whenever a delegation comes to Chiadzwa to see what is happening on the ground, the police and the army just clears the land of these people,” Mtisi said. “That is what normally precipitates violence.”

Mtisi explained that there were violent removals ahead of a visit by the African Diamond Producers Association in April and just a week ago to “clean” the fields before a "fact-finding" visit by President Mugabe.

Human rights groups have tried to label Marange stones as “conflict diamonds” under a broader definition that they argue is more true to the spirit of Kimberley’s mandate and includes violence perpetrated by government.

But Harare and other Kimberley members say the Marange diamonds are conflict-free because sales are not financing a rebel group. Kimberley currently defines “conflict diamonds” as “rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.”

A text drafted in Dubai in April 2011—meant to find consensus amid the confusion following Yamba’s March announcement—did not refer at all to monitoring violence in Marange. It also raised the bar for human rights complaints to be investigated.

Despite this, Zimbabwe did not sign on, insisting that it had complete freedom to sell. Sources say the Dubai text will be the starting point for discussions in Kinshasa.

Meanwhile, demand for rough stones is rising. “The annual global demand for industrial diamonds” is at least “ten-times the total world production of natural diamonds,” according to Mining Journal, an industry publication. Most Marange diamonds are industrial grade.

As China looks to overtake India as the world’s center for cutting and polishing, the countries are vying for a steady supply of rough stones. Both countries have pushed for the unconditional certification of Marange diamonds. China has two joint ventures with the Zimbabwean government to develop portions of the Marange field.

Smillie said Kimberley cannot regulate effectively because the interests of so many participants prevent consensus.

“There is a shortage of rough diamonds in the world today, and the eagerness, the almost greed in the industry, particularly in India, is palpable. You can almost hear it working in the Kimberley Process. It’s like rats gnawing at the woodwork,” Smillie said.

“That’s something that is bringing the Kimberley Process down, this almost inbuilt impossibility of reaching consensus, when you have to get tough, when regulators have to regulate and can’t," he said.

The African Diamond Producers Association has also urged acceptance of Yamba’s decision. However, sources say that a West African faction might be breaking ranks with the ADPA over the Zimbabwe issue. The major southern African ADPA players are still speaking strongly in favor of supporting Zimbabwe and upholding Yamba’s decision.

David Kassel, director of Mbada Diamonds, the largest company operating in Marange, told VOA Studio 7 reporter Sandra Nyaira that Mbada has been selling its rough stones and that South Africa has been the main buyer.

“We have sold very small parcels [of Marange diamonds] to customers in South Africa, and we will continue to do so. And we continue to have people viewing our diamonds for sale at the moment,” Kassel said. “There are many, many buyers who want to buy, who are happy to buy. As far as we are concerned, these are not conflict diamonds at all.”

Confusion within Kimberley Process has allowed Zimbabwe to export Marange stones without consequences.

Mines Minister Mpofu called the Kimberley Process hypocritical: “They contradict themselves. They say one thing and do another and at the same time blame us for their mistakes.”

Participants and observers insist the stalemated issue is not whether or not Zimbabwe should sell its diamonds but whether or not it has complied with international standards that would ensure diamond revenues benefit Zimbabweans—not merely an elite.

US Kimberley representative Brad Brooks-Rubin told Voice of America in an e-mail: “The United States remains committed to the principles of Kimberley Process and seeks a resolution to the impasse over exports from Zimbabwe's Marange diamond fields.” The e-mail continues, “U.S. would like to see our relationship with Zimbabwe and other producers strengthened in Kinshasa in order to ensure the KP's future and enable diamond exports to contribute positively to the region's economy.”

But the US wants such an agreement to come from dialogue and then consensus among participants. With Western members calling for more supervision and African producers insisting that Zimbabwe is certified already, few think a consensus is realistic.

Given Yamba’s unilateral declaration, some are looking to the next Kimberley chair to restore order to the process. But, for the first time in Kimberley’s history, there is no vice chair to set up the succession. Even in this decision, Kimberley looks deeply divided with the United States and the United Arab Emirates – countries on opposite sides of the issue – in the running for the vice chair position.

Insiders say some participants have mooted the creation of a “Kimberley Process Plus,” in which members would adhere to stricter regulations with a broader interpretation of what constitutes a conflict diamond. It’s not clear if this overhauled organization would interact with the Kimberley Process - or replace it - but a failure to achieve consensus in Kinshasa would increase the likelihood of such a divisive move.

But Minister Mpofu has brushed aside Kimberley’s non-governmental observer, refusing Mtisi access to the Marange field. Mtisi has even been silenced, trying to inform Parliamentarians about smuggling and abuses in Marange. Mtisi wants a new Kimberley agreement to ensure that Zimbabwe’s government respects the role of non-governmental observers.

“The Kimberley Process is being put to the test,” said Mtisi. “It’s going to be a contentious issue that may break or even strengthen the Kimberley Process.”

As Kimberly struggles to fulfill its mission, the situation on the ground in Zimbabwe remains the same – seemingly to the liking of insiders who have little to lose without certification and much to gain by Kimberley’s absence or reduction to irrelevance.